Economics of Downton Abbey: Death and Taxes

“The death rattle of the landed order, like the death knell of capitalism, has been clearly heard dozens of times over the last hundred years and more,” writes F. M. L. Thompson, a prominent historian known for his work on landed estates. He continues, “Yet there is a suspicion that the sounds have been mis-heard or misinterpreted, for collapse and decomposition have never followed the symptoms of sickness and crisis” (1990, p.1).

Highclere Castle, where Downton Abbey is filmed
Highclere Castle, where Downton Abbey is filmed

In the opening episode of Season Four of Downton Abbey, Lord Grantham bemoans the ‘merciless’ death duties imposed on Downton following Matthew Crawley’s death. First called Estate Duties, death duties were introduced through the Finance Act of 1894. They were “payable in respect of all property…which passes on the death of a person” (Bailey, 1945). The burden only increased after World War I, when death duties were raised to 40% on estates of two million pounds and over. Britain was heavily in debt and actively sought ways to pay for war reparations (Daunton, 1996). Property was targeted – as Lord Grantham is quick to point out.

Land Sales

To pay the death duties, landed gentry without enough cash often had to sell portions of their estates. There are plenty of anecdotes involving landed gentry who lost part or all of their estates in part due to high death duties in the inter-war period. These stories only increased in number following World War II, when the maximum death duties rose to 65% (Thompson, 1990).

In his 2007 journal article, Mark Rothery notes that most historians agree that 6 million acres of land were sold between 1910 and 1921. Interestingly,  indebtedness and tax burdens are not cited as reasons. Instead the heavy sales – the peak of which was 1918 to 1921, according to Thompson – were primarily attributed to high land values, and Rothery comments on the ‘very high levels’ of personal wealth for many landed gentry who died during this period (p. 257).

Selling off pieces of estates coincided with a willingness to diversify investments to increase wealth. Some aristocratic landowners got in trouble with failed investments, as Lord Grantham did with his infamous Grand Trunk Railway investment in Season Three of Downton Abbey. Overall, however, the diversification worked in their favor, with stocks yielding higher returns on investment.  Thompson confirms that the majority of land sales were to “strengthen finances through restructured portfolios” rather than bail out bankrupt landowners (1991, p. 7).  Rothery concludes “despite their frequent claims of poverty and extinction the total wealth of the [landed] gentry… remained substantial” (p. 267).

Did Death Duties Destroy the Landed Gentry?

Thompson writes that the landed aristocracy decried the death duties as “vicious, vindictive, and partisan instruments deliberately designed to destroy inherited estates and inherited wealth, and humble the pride and pomp of ancient families” (1990, p. 2).

It’s as if Lord Grantham was speaking those very words in the opening episode of Season Four. Death duties were no doubt crippling for many landed aristocrats. Lord Grantham’s situation exemplifies the struggle to pay death duties. In his case, because of the failed Grand Trunk Railway investment, Matthew Crawley became part owner of the estate. The death duties on his half of the estate that came with his untimely death were clearly an unexpected burden. When the Crawleys found out that Matthew’s letter to Lady Mary demonstrated ‘testamentary intention’ to have Lady Mary as sole heiress of his half of the estate, Lord Grantham lamented that there would be death duties twice before it got to ‘little George’.

Thompson disagrees, however, that death duties and other tax burdens brought the entire social class of landed aristocrats to their knees. While many families struggled to pay the taxes, he writes that the evidence of the decline of the great estates is largely anecdotal. Although more than 600 great homes had been destroyed between 1920 and 1975, Thompson is quick to point out that 232 new estate homes were built again, albeit smaller and more manageable. This was indicative of the changing social norms following World War I. With the loss of servants as better job opportunities in offices and retail became available, maintaining large estates was no longer viable.  Furthermore, the upkeep of the great estates – like Highclere Castle, where Downton Abbey is filmed – is enormously expensive. While many historians argue that the loss of the landed gentry marked the decline of political and social power, Thompson makes a convincing argument that perhaps the landed aristocracy went “into self-liquidation as a social group” (1990, p. 7) in response to the social and political changes already taking place.

Citing Thompson and Rothery is not done to refute the argument that death duties placed a burden on landed society; rather, their work draws attention to the fact the anecdotal evidence of broken estates does not tell the whole story. There were many estate owners, like Lord Grantham, who struggled with finances, but their individual stories have many complexities that cannot represent landed elites as a social class.

lady-mary-at-tenants-lunch
Lady Mary taking an interest in the estate at the Tenants’ Lunch

At Downton, Lord Grantham remains strapped for cash and considers paying the death duties in full by selling portions of the estate, as several landed aristocrats did during the inter-war period. However, Tom Branson has another plan in mind, and he has gotten Lady Mary’s support. They are both (much) more forward-thinking than Lord Grantham when it comes to the estate. They aim to continue Matthew Crawley’s plans, and perhaps they hope to make the estate more profitable through agriculture  to help pay the death duties.  I’m looking forward to seeing how they resolve the unexpected financial burden.

Further Reading:

Bailey, R. F. (1945). Double Taxation in Regard to Death DutiesJournal of Comparative Legislation and International Law, Third Series, Vol. 27, No. 3/4, pp. 46 – 51.

Daunton, M. J. (1996). How to Pay for the War: State, Society, and Taxation in Britain, 1917 – 24The English Historical Review, Vol. 111, No. 443, pp. 882 – 919.

Rothery, M. (2007). The Wealth of the English Landed GentryThe Agricultural History Review, Vol. 55, No. 2, pp. 255 – 268. 

Thompson, F. M. L. (1990). Presidential Address: English Landed Society in the Twentieth Century I Property: Collapse and SurvivalTransactions of the Royal Historical Society, Fifth Series, Vol. 4, pp 1 – 24.

Thompson, F. M. L. (1991). Presidential Address: English Landed Society in the Twentieth Century II New Poor and New RichTransactions of the Royal Historical Society, Sixth Series, Vol. 1, pp 1 – 20.

Image 1: Photo by Richard Munckton from Windsor, Melbourne, Australia (Downton Abbey (Highclere Castle)) [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)%5D, via Wikimedia Commons

Image 2: From Episode 1 of Season Four. Retrieved from Downton Abbey Online.

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